PETROLEUM. Analytical journal. New projects, fields’ development, production, processing and transportation of oil and gas, presentation of the companies, statistics on the production of hydrocarbons, monitoring of investment legislation.

Legislation

The issues related to the provision of preferences to Kazakhstani legal entities in connection with their investments in Kazakhstan are mainly governed by the Law of the Republic of Kazakhstan “On Investments” dated January 8, 2003 (hereinafter the “Investment Law”) and the Code of the Republic of Kazakhstan “On Taxes and Other Obligatory Payments to the Budget” dated December 10, 2008 (hereinafter the “Tax Code”).

For many years, the investors, including subsoil users, have reasonably taken the state courts with mistrust. There are certain presuppositions for that. After all, if the state is a party to the dispute, the decision of the Court is often not only of usual civilian nature, but rather of political one. Therefore, the objectivity, independence and impartiality of judges of state courts suffer.

The dispositivity (principle of optionality) in the civil law lays special emphasis on a contract as an agreement of the parties to a civil transaction, which sets forth their rights and obligations. Article 2 of the Civil Code of the Republic of Kazakhstan specifies that parties are free to establish their rights and obligations on the basis of a contract and in the determination of contract terms and conditions, which do not contradict the law.

Situations where a contractor performs additional work under a construction contract occur often in practice. In such a situation various questions arise: Is the contractor obliged to perform additional work? Does he or she have the right to demand payment for it and how can he or she reduce the potential risks of not being paid? Let’s examine these questions

The experts of GRATA Law Firm exclusively for Petroleum conducted a comparative analysis of the investment law in Kazakhstan and Azerbaijan
– Let us start with a particular example. In the spring of this year, a Norwegian company - Statoil, announced the departure of Kazakhstan. Having withdrawn Abai project, it chose Azerbaijan and signed a Memorandum of Understanding with the State Oil Company of Azerbaijan Republic in respect to Zafar and Mashal structures in the Azerbaijani sector of the Caspian Sea.

As is known, contracts for subsoil use have a special status.This is because they concern the natural resources of the Republic of Kazakhstan and thus the country's vital interests. The subsoil of Kazakhstan is the exclusive property of the State. Despite the fact that the State grants the right of subsoil use to the possession of individuals, it nevertheless endeavours to retain substantial control over the rational use of mineral resources.

Foreign companies face a variety of legal risks in the course of doing business in the Republic of Kazakhstan (RoK). Inadequate laws, corruption, lack of transparency of courts and regulatory authorities, unpredictability of judgments issued by state courts, in the author’s view, represent the greatest risks when doing business in the RoK.

Lately, obtaining a refund of value added tax (VAT) incurred in connection with the export of goods has been a pressing issue. Despite the fact that the tax legislation clearly regulates the procedure for refunding excess VAT from the budget, in practice there are various obstacles for taxpayers. This article focuses on the amount of excess VAT accumulated during the exploration period prior to the export of minerals.

The main statute governing international arbitration in the Republic of Kazakhstan (hereinafter "RoK") was introduced in 2004. However, the growing interest in the resolution of disputes by means of international arbitration is only a recent development. In addition to those who would traditionally pursue this route, such as foreign companies or subsidiaries located in the RoK, an increasing number of Kazakhstani companies are considering international arbitration.

Kazakhstan, like many other countries, has an established permit procedure for employing foreign workers. In this case, obtaining a permit for engagement of foreign workers is the responsibility of an employer.

In practice employers frequently commit violations when engaging foreign workers owing to incomplete knowledge of the appropriate procedures. Most of these violations involve fines for employers and have a negative impact on the engagement of non-residents in the future. Often, employers do not have a holistic view of all phases of the process of engaging such workers.

Lately, amendments to legislation have been occurring often, some- times in a dash. For example, the Subsoil Law was adopted a little more than two years ago and it has already been changed nine times since then, of which seven times in 2012.

In keeping with GRATA Law Firm’s policy of informing clients regarding important legal developments that may affect their business, we would like to draw your attention to recent changes in Kazakh legislation in connection with the adoption of the new draft law entitled “On the Main Pipeline.”

The new law “On subsoil and subsoil use” of June 24, 2010, which replaced two previous laws in the country – the Law on Subsoil and Subsoil Use and the Law on Oil – has regulated activity in the sphere of subsoil usefor one and a half years.

The President of the Republic of Kazakhstan signed the Law of the Republic of Kazakhstan "On Gas Supply and Gas" (hereinafter - the "New Law", "Gas Law" or the "Law"), the main provisions of which are discussed in this article. The following describes what we believe to be the most important specialties and provisions of the Law.

Gas Law is a novelty for legislation of the Republic of Kazakhstan. Previously gas and the gas supply sphere were partially regulated by the subsoil use legislation and a number of the GovernmentResolutions. The Law aims to address the relations in the gas and gas supply sphere and as a general principle seeks to prioritise the internal market provision of commercial (under the Law, a mixture of hydrocarbons with a predominance of methane) and liquefied petroleum gas (under the Law, a mixture of propane and butane) produced in the RK.